Financial Fair Play and the English Pyramid

An actual slide from the 2009 UEFA FFPR proposal powerpoint. Maybe.

You may have heard about the Financial Fair Play Regulations (FFPR). In the works since 2009, the rules are the sword which UEFA’s Michel Platini hopes will slay the dragon of financial excess in the European soccer economy. The legislation requires clubs to be financially break even or profitable without the help of cozy financing schemes (*ahem* ̶R̶o̶m̶a̶n̶  Sheik Mansour) while also maintaining or improving debt levels. The carrots offered to compliant clubs are reduced costs and financial stability, inducements which fall somewhere between an actual carrot and a package of underwear for Christmas. The stick that will compel clubs to fall in line is UEFA’s ability to deny entry to the Super Cup, the Europa League, and the Champions League. The glory and prizes are enough to give credence to Platini’s message: if you want to play at the highest level you will follow the rules.

Some doubt it, some are in denial, and some are depending on it, but FFPR is coming. What may surprise you is exactly where it is coming to and what will happen.

Systemic Risk in the Soccer Economy

“Systemic risk” is a concept which has come to the forefront in the past couple of years as people have searched for the cause of the financial crisis. Post-mortems have focused on the unbelievable level of risk taken on by institutions and the speed with which it was transmitted to others when conditions started to sour. Contrary to theory diversification, rather than mitigating risk, actually contributed to the contagion and amplified the damage. The broader consequences of the crisis have been far too familiar for the past three years and they could have been prevented if regulators were vigilant for the right signs. A similar level of regulatory passiveness currently exists in the soccer economy and it is encouraging the rise of financial risks that pose a serious threat to clubs and their supporters.

What is systemic risk?

Systemic risk refers to the

Why UEFA Should Crowdsource Financial Fair Play

The Great Financial Meltdown was preventable.  The post-mortem of the 2008 collapse has reiterated what is true of every man-made crisis, that they can be avoided.  The warning lights were flashing long ago and there was ample time to stop the bubble.  Robert Shiller knew,  Nouriel Roubini knew and plenty of others were sounding the alarm because they had the information to understand what was going on.  Currently soccer is depriving itself of its own early warning system because data on club finances, including player transfer activities and ownership is being kept out of supporter hands.  This needs to change throughout the soccer world and the best place to start is through UEFA.

Groupon, ManCity and the Credibility of a Regulator

Right now the Securities Exchange Commission and UEFA have more in common than they would think.  In the past month both have been confronted with situations that call into question their role and legitimacy as policemen of their respective neighborhoods.

Groupon Inc., the daily-deal site, is looking to sell shares in an initial public offering valuing the company at close to $20bn.